Long Margin Account Calculations

What this video covers

• The foundational margin formula: Equity equals Long Market Value (LMV) minus Debit Balance (DR), and how to solve for any one variable when the other two are given
• Why the debit balance is fixed at the original loan amount and does not fluctuate with market value, only changing through transactions, deposits, withdrawals, or interest accrual
• How to calculate excess equity when market value rises, and why that excess gets credited to the Special Memorandum Account (SMA)
• The distinction between a restricted account (equity below 50% of LMV) and a maintenance call (equity below 25% of LMV), and what actions are permitted or prohibited in each state
• The retention requirement in a restricted account: 50% of sale proceeds must reduce the debit balance
• How to calculate buying power as two times excess equity (or two times SMA), and why the 2x multiplier comes directly from the 50% Regulation T (Reg T) requirement
• How to apply the equity formula across rising, falling, and static market scenarios to avoid the most common exam traps